In a setback to pharma majors Cipla and Dr Reddy’s Laboratories, the Supreme Court on Friday upheld the validity of government notifications capping the retail prices of essential medicines in public interest.
A bench headed by justice Madan B Lokur – which allowed the Centre’s appeals against orders issued by various high courts that had stayed the notifications – asked high courts to be circumspect in such matters.
The pharma companies allegedly overcharged on certain drugs. As Cipla’s latest annual report, the company has received notices of demand of Rs 1768.51 crore for overcharging on the drugs.
The SC bench said in matters where public interest was involved, courts ought to be circumspect in granting any stay.
“The consequence of an interim order might be quite serious to society and consumers and might cause damage to public interest and have a long term impact,” the bench said in a 94-page order.
“We make it clear that it is not our intention to suggest to any court how and in what circumstances interim orders should or should not be passed but it is certainly our intention to make it known to the courts that the time has come when it is necessary to be somewhat more circumspect while granting an interim order in matters having financial or economic implications,” it said.
Solicitor general Ranjit Kumar had requested the court to comment on the manner various high courts have been granting interim stay in matters concerning economic issues and particularly in matters pertaining to the sale of formulations at the retail price or ceiling price fixed by the Central Government through notifications issued under the Drug Price Control Order (DPCO), 1995.
The notifications prescribed the norms for conversion cost, packing charges and process loss of raw materials for arriving at the retail prices.
The top court rejected the companies’ contention that the government had issued the orders mechanically and without any application of mind.
It said a lot was at stake not only for the industry but also for the consumers and therefore, courts should be extremely cautious in interfering in any manner whatsoever with the working of the drug industry.